Consumer champion Martin Lewis has issued a stark warning about the dangers of Buy Now, Pay Later services after witnessing a close friend's devastating financial struggle with the increasingly popular payment method.
The Money Saving Expert founder revealed his personal connection to the growing crisis during an emotional appearance on BBC's Sunday with Laura Kuenssberg, describing how he'd watched someone close to him become trapped by BNPL debt.
The Human Cost of Deferred Payments
"It really brought home to me how dangerous this is becoming," Lewis stated, his voice filled with concern. "We're seeing millions of people, particularly younger consumers and those already facing financial pressure, being drawn into debt they simply cannot afford."
Recent research paints an alarming picture, with approximately 14 million British adults having used BNPL services in the past year. Even more worrying is that nearly one in five users report falling behind on payments, creating a snowball effect of financial stress.
Regulatory Black Hole Exposed
Lewis highlighted the critical gap in consumer protection that leaves BNPL users vulnerable. Unlike traditional credit arrangements, these services currently operate outside Financial Conduct Authority regulation, meaning customers lack crucial safeguards and legal protections.
"This isn't just about individual responsibility," Lewis argued. "When systems are designed to encourage spending beyond means without proper checks, we have a systemic problem that requires immediate government intervention."
Three Major Risks Identified
- Normalisation of debt: BNPL makes borrowing feel like a routine shopping choice rather than a financial commitment
- Credit score impact: Missed payments can still damage credit ratings despite the unregulated status
- Spiral potential: Multiple BNPL agreements can quickly become unmanageable for those on tight budgets
Political Pressure Mounts for Change
The financial expert's warning comes at a crucial time, with the government having delayed long-promised BNPL regulations despite cross-party support for action. Lewis expressed frustration at the political stalemate, emphasising that vulnerable consumers continue to pay the price for parliamentary inaction.
"We've been talking about this for years now," he noted. "Meanwhile, the problem grows larger and more people find themselves in financial difficulty. The time for consultation is over - we need concrete action."
Practical Advice for Consumers
While pushing for regulatory change, Lewis offered immediate guidance for those using or considering BNPL services:
- Treat BNPL as formal credit, not free money
- Set calendar reminders for payment dates to avoid missed deadlines
- Consider whether you'd make the same purchase if required to pay upfront
- Regularly review all your BNPL commitments to maintain an overview of total debt
As the cost of living crisis continues to squeeze household budgets, Lewis's intervention serves as a crucial reminder that financial innovation must be matched by equally robust consumer protection.
